Asian shares ended lower on Tuesday as investors took a break from the new year's rallies, with caution setting in ahead of corporate earnings season for the last quarter of 2012 and the European Central Bank's policy meeting later in the week.
"A mixed bag of results are again expected. Corporate profits are likely to broadly rise by about 3% across the board, in line with general economic growth," predicted Jason Huges, Head of Premium Client Management, IG Markets in a note.
The FTSE CNBC Asia 100 index edged down 0.6 percent.
Japan's Nikkei fell for a second day as investors turned cautious over the index's recent rapid gains and sold shares in exporters as the yen's depreciation paused, while buying in defensive shares supported sentiment.
The benchmark index declined 0.8 percent to 10,508 points while the broader Topix fell 1 percent.
Sharp climbed 3.9 percent after the struggling TV maker said it had a better-than-expected operating profit for October-December, as it scrambles to generate profits in hopes of securing fresh financing.
Nintendo lost 2.9 percent after the Japanese game maker said year-end sales of its Wii U games console were steady, though not as strong as when its Wii predecessor was first launched.
Japanese lender Aozora Bank tumbled 4 percent, extending losses after Monday's 13 percent slump on news that U.S. private-equity fund Cerberus will sell most of its 58 percent stake in the bank.
South Korean stocks finished lower, with investors concerned about the outlook for corporate results, even after Samsung Electronics forecast a record quarterly profit.
Shares in the electronics giant fell 1.3 percent, extending losses after touching a lifetime high last week.
The Korea Composite Stock Price Index ended down 0.7 percent at 1,997.94 points.
Bio pharmaceutical company VGX International shot up 10.5 percent after its U.S-based parent company, Inovio Pharmaceuticals, entered into a follow-on agreement with the Bill Gates-backed PATH's malaria vaccine initiative.
Australian shares ended 0.6 percent lower, losing steam as miners and banks retreated, showing just how cautious investors are towards a steep rise in iron ore prices, U.S. corporate earnings and debt ceiling talks.
The benchmark S&P/ASX 200 index was down 27.1 points at 4,690.2. It slipped 0.1 percent to 4,717.3 on Monday.
Major banks pulled back from gains on new Basel liquidity rules. Australia's biggest lender, Commonwealth Bank of Australia, lost nearly 2 percent, stepping back from an all-time high hit in the previous session.
Australia posted a seasonally adjusted trade deficit of A$2.6 billion in November, compared with a deficit of A$2.4 billion in October, the Australian Bureau of Statistics said Tuesday.
Energy stocks gained on higher oil prices, with the country's biggest oil producer Woodside Petroleum and gas producer Linc Energy soared 10.9 percent after it said it broke an oil production milestone of 6,000 barrels per day.
New Zealand's benchmark NZX 50 index inched up 0.1 percent to close at a fresh 5-year high of 4,090.4.
In China, shares fell from a near seven-month high, hit by weakness in the property and financial sectors after official media said a stricter enforcement of property curbs was needed to crimp rising home prices.
The CSI300 of the top Shanghai and Shenzhen listings closed down 0.4 percent at 2,525.3. The Shanghai Composite Index shed 0.4 percent. Both indexes had closed at their highest since mid-June on Monday.
Longfor Properties and Evergrande fell 2.3 and 1.5 percent, respectively, in Hong Kong despite posting December sales that helped both companies exceed their stated 2012 targets. Poly Real Estate fell 0.8 percent in Shanghai
BYD, a Chinese carmaker backed by billionaire investor Warren Buffett, jumped 2.6 percent after it said on Monday it had gained official permission to sell its electric buses in all European Union member states.
Hong Kong shares closed at their lowest in a week, as investors took profit on mainland property counters after an official media report raised fears of more stringent enforcement of sector curbs, stalling its strong gains in recent months.
Ping An Insurance sank 4.0 percent after sources told Reuters that state-run China Development Bank (CDB) has expressed concern over the funding behind the effort of Thai conglomerate CP Group to buy HSBC's stake in China's second-largest insurer.
India's BSE Index finished up 0.3 percent while the 50-share NSE Index ended 0.2 percent higher.